On Wednesday, after Egypt’s Central Bank (ECB) raised its main interest rate and devalued the currency by 14 percent, the Egyptian pound slipped further against the dollar.
In order to combat inflationary waves triggered by the COVID-19 pandemic and Russia’s war in Ukraine, which raised oil prices to record highs, the moves by the Central Bank of Egypt resulted in the devaluation of the local currency.
The US dollar was being sold at more than 18.5 pounds by banks, while being bought at more than 18.45. It was sold at 18.42 pounds and bought at 18.32 by mid-Wednesday, rising from an average of 15.6 pounds for $1 before the central bank’s decision on Monday.
The key interest rate was increased by the Egyptian central bank by 100 basis points to reach 9.75 percent. The ECB also stated that overnight deposit and lending rate were also raised by 100 basis points each to reach 9.25 percent and 10.25 percent, respectively.
The war in Ukraine, which has shaken the global economy and threatened food supplies and livelihoods of people across the world, was cited by the central bank as the key factor in the decision.
The move is likely a sign that the government is working to secure another financing package from the International Monetary Fund (IMF), according to economists.